Advice on Florida investment prospectus

[Karl Sivert Skatland]

Hello everyone!

I recently have gotten the opportunity to invest in a development project in Championsgate Florida. As I really do not know the area I am looking to my fellow biggerpockets friends to help me evaluate the deal.

The project is called Champions Vue Apartments and is located close to the Omni Orlando Resort in Championsgate. It is a 15 building, 326 apartment project - and the strategy is to build, lease the properties and sell it to an institutional investor once the buildings are fully leased (5% vacancy).

The whole process is estimated to take three to four years from building starts until entire property is sold.

SunPark Developers are the developers, and also the ones guaranteeing for the mortgage (80 % of the entire building costs). The contractor is Robert B. Kennedy INC, and the rental management company is Lincoln Property Company (they are also the ones providing the numbers for expected rental income).

The estimated costs are 44,5 MILL USD, where 20 % is investment money and 80 % is financed by mortgage with a 6,5 % interest rate.

Once build and rented they are budgeting with a total income of 4,989,000 USD - and a total expense of 1,830,000 USD. This gives a positive cash flow of 450,000 USD after mortgage and all expenses is paid.

The monthly rental price per sqft. is 1,3 USD. They are expecting a yield of 5,5 % once sold.

The customer target is residents working in the surrounding area. I have the entire financial prospectus, but firstly I wanted som initial feedback if anyone knows the area or have done similar deals.

The developers are expecting a healthy 18% IRR.